Quote:
Originally Posted by Fred Douglass
...many, many articles state that it was the liberal Dumbocrats and that 1970's law aimed at putting indigents into private homes (still can't name it.....C_ _??) which started the economic disaster. Many of these explanations point out that banks were CAJOLED into lending to these people (threatened with legal action). They had to accept such things as welfare, ADC and unemployment check stubs as "sources of income" for qualification for massive mortgage payments.
My point was that the TWO Fed-subsidized Freddie/Fanny thingamabobs were just revealed to be giving THEIR execs massive million-dollar bone-asses.........
Talk about the wolf using the farmer's stove to cook the mutton!!!!!!
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The CRA [Community Reinvestment Act, I think] Goes way back beyond Clinton. Its first 'toothless' offering was over 30, maybe 40 years ago. [Carter?] It has been updated and strengthened many times. Some with Dem majority votes and some with GOP majority votes. ALL politicians are willing to buy the votes of the poor. Plenty of blame to go around.
The CRA IS one of the basic 'holes in the economic dike' but neither the reds or the blues blame the other for it. Because the whole premise of both parties would crash if they did.
The real beginning was way back in the late 60's, early 70's "Civil Rights Era" The first step was outlawing "red lining" [denying a loan because of the apps location or the property location without any further checking]
Bankers KNEW houses in certain areas would ALWAYS DEFAULT, so why waste money checking. An obvious case could be made that this was Racist. So the bankers did the income and credit checks as required. No change in results, no sufficient income, no down payment, no good credit history, no good property appraisal.
CRA is passed and it says says, You must make these loans. Banks say, We cannot make these loans, YOUR BANKING REGULATIONS say we are NOT ALLOWED to make loans with such high risk.
So the next step and the first one the politicians do not want anyone talking about, is Congress REPEALS the banking regs that disallow the worthless loans. And nothing happens, no loans. Congress says make loans or we will shut you down. Banks say, We can't make these loans. YOUR BANKING REGULATIONS say we cannot have bad paper on our books.
Congress REPEALS MORE BANKING REGS. Says banks may bundle bad loans as 'securities' and sell them. No loans result. Banks say we are deposit banks, we take deposits from the public and loan out money for QUALIFIED homes and businesses, YOUR BANKING REGULATIONS say we are not allowed to handle investment instruments below AAA. Congress REPEALS THIS TOO. Equal guilt on both parties. This is all over the course of years. At the start, bankers might have been the most conservative of all business men, AND HONEST. Cold hearted perhaps, but isn't that what was required in a banker?
New people enter the industry and see ways to make fortunes out of nothing. AND THEY DO!!! Why is there surprise?
The entire "house of cards" rides the INFLATION TRAIN for years. Inflation in houses STOPS, the "I" train crashes and burns and burns. Flames spread throughout the economy.
NOW the politicians says Greedy bankers and LACK of REGULATION caused all the mortgage mess. Like the "Not ME!" ghost.
By the way, I am a registered Independent, and I think liberals must have all had frontal lobos. But both parties ARE responsible. Can't just blame the Democrats and/or liberals. [is there a difference?]
Dan
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